Market Review, Commodities, Currencies, Economic & Corporate Update - 24.01.24

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, buoyed by gains in food producers and miners.
  • Food producer, AVI (JO: AVIJ ) climbed 5.0%, after the company issued an upbeat profit outlook.
  • Peers, Tiger Brands (JO: TBSJ ), RFG Holdings (JO: RFGJ ) and RCL Foods (JO: RCLJ ) gained 5.0%, 3.9%, 3.6% and 1.5%, respectively.
  • Gold miners, Gold Fields (JO: GFIJ ), AngloGold Ashanti (JO: ANGJ ), Sibanye Stillwater (JO: SSWJ ) and Harmony Gold Mining Company (JO: HARJ ) advanced 4.5%, 4.3%, 2.8% and 1.7%, respectively.
  • Platinum miners, Impala Platinum Holdings (JO: IMPJ ) and Northam Platinum (JO: NPHJ ) jumped 3.7% and 2.6%, respectively.
  • Property developers, Dipula Income Fund (JO: DIBJ ), Fortress REIT (JO: FFAJ ) and Emira Property Fund (JO: EMIJ ) added 2.5%, 1.7% and 1.2%, respectively.
  • The JSE All Share index advanced 1.4% to close at 73,337.19.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, as investors await domestic economic data for further cues on the Bank of England’s (BoE) monetary policy stance.
  • Real estate companies, Persimmon (LON: PSN ), Taylor Wimpey (LON: TW ), Berkeley Group Holdings (LON: BKGH ) and Barratt Developments (LON: BDEV ) shed 2.4%, 1.9%, 1.8% and 1.3%, respectively.
  • On the flipside, banks, Standard Chartered (LON: STAN ) and Barclays (LON: BARC ) added 4.3% and 1.3%, respectively.
  • Miners, Antofagasta (LON: ANTO ), Rio Tinto (LON: RIO ) and Anglo American (JO: AGLJ ) advanced 2.4%, 2.3% and 2.2%, respectively.
  • Retail company, Associated British Foods (LON: ABF ) gained 0.8%, after the company reported a 2.1% jump in like-for-like sales at its clothing retailer Primark during the Christmas period.
  • The FTSE 100 index marginally eased to close at 7,485.73.

US MARKET REVIEW

  • US markets ended mostly higher yesterday, following domestic corporate earnings results.
  • Verizon Communications (NYSE: VZ ) jumped 6.7%, after the company reported higher than expected revenue, along with sizeable customer gains in segments of its consumer-wireless business.
  • Technology companies, Intel (NASDAQ: INTC ), Apple (NASDAQ: AAPL ) and Microsoft (NASDAQ: MSFT ) gained 1.4%, 0.7% and 0.6%, respectively.
  • On the contrary, homebuilders, D.R. Horton (NYSE: DHI ), PulteGroup (NYSE: PHM ) and Lennar Corporation (NYSE: LEN ) plunged 9.2%, 5.2% and 4.6%, respectively.
  • Financial services companies, Goldman Sachs Group (NYSE: GS ) and JPMorgan Chase (NYSE: JPM ) eased 1.3% and 0.7%, respectively.
  • The S&P 500 index rose 0.3% to settle at 4,864.60, while the DJIA index eased 0.3% to close at 37,905.45.
  • The NASDAQ index climbed 0.4% to end the trading session at 15,425.94.

ASIA MARKET REVIEW

  • Asian markets are trading mostly lower this morning.
  • In Japan, real estate company, Sumitomo Realty & Development (TYO: 8830 ) has shed 3.4%.
  • On the flipside, life insurance company, Dai-ichi Life Holdings (TYO: 8750 ) has gained 2.2%.
  • In Hong Kong, internet technology company, Netease (NASDAQ: NTES ) has advanced 4.0%.
  • On the other hand, pharmaceutical company, Sino Biopharmaceutical (HK: 1177 ) has declined 3.0%.
  • In South Korea, construction company, Bumyang Construction (KS: 002410 ) has dropped 5.6%.
  • On the contrary, chemical company, Lotte Chemical (KS: 011170 ) has surged 8.5%.
  • The Nikkei 225 index is trading 0.7% lower at 36,268.15.
  • The Hang Seng index is trading 1.4% higher at 15,565.34, while the Kospi index is trading 0.2% lower at 2,473.09.

COMMODITIES

  • At 05:30 SAST today, Brent prices marginally rose to trade at $79.57/bl.
  • Yesterday, Brent prices fell 0.6% to settle at $79.55/bl, amid ease in supply concerns. Meanwhile, the American Petroleum Institute (API) reported that the US crude oil inventories fell by 6.67mn bls in the week ended 21 January 2024.
  • At 05:30 SAST today, gold prices declined 0.1% to trade at $2,025.31/oz. Yesterday, gold gained 0.4% to close at $2,027.68/oz, as investors await US economic data for more cues to the Federal Reserve's (Fed) timeline for interest rate cuts.
  • Yesterday, copper rose 0.7% to close at $8,312.15/mt. Aluminium closed 3.6% higher at $2,236.85/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In the US, the Richmond Fed manufacturing index dropped in January.
  • The yield on benchmark government bonds rose yesterday. The yield on the 2030 bond advanced to 9.76%, while that for the longer-dated 2040 issue rose to 12.19%.
  • At 05:30 SAST, the US dollar is trading marginally higher against the South African rand at R19.0472, while the euro is trading 0.1% higher at R20.6873. At 05:30 SAST, the British pound has gained 0.1% against the South African rand to trade at R24.1889.
  • Yesterday, the euro weakened against most of the major currencies.
  • At 05:30 SAST, the euro advanced 0.1% against the US dollar to trade at $1.0863, while it has marginally weakened against the British pound to trade at GBP0.8553.

ECONOMIC UPDATES

  • In the eurozone, the flash consumer confidence index recorded an unexpected drop to a level of -16.10 in January, compared to a reading of -15.00 in the previous month,
  • In the US, the Richmond Fed manufacturing index eased to a level of -15.00 in January. In the prior month, the Richmond Fed manufacturing index had recorded a reading of -11.00.
  • In Canada, the new housing price index recorded a flat reading on a monthly basis in December, compared to a drop of 0.2% in the prior month.
  • In Japan, the preliminary Nikkei services PMI registered a rise to a level of 52.70 in January. In the prior month, Nikkei services PMI had recorded a level of 51.50.
  • In Japan, the preliminary manufacturing PMI advanced to a level of 48.00 in January, compared to a level of 47.90 in the previous month. Markets were anticipating manufacturing PMI to climb to 48.20.
  • In Japan, trade deficit widened to JPY412.70bn in December, compared to a revised deficit of JPY350.60 billion in the prior month.
  • In Australia, the Westpac leading index recorded a drop of 0.03% on a MoM basis in December. In the previous month, the Westpac leading index had recorded a rise of 0.1%.
  • In Australia, the flash Markit manufacturing PMI rose to a level of 50.30 in January. In the prior month, the Markit manufacturing PMI had recorded a level of 47.60.
  • In New Zealand, the consumer price index (CPI) registered a rise of 4.7% on an YoY basis in in 4Q23, compared to an advance of 5.6% in the previous quarter.

CORPORATE UPDATES

SOUTH AFRICA

  • Woolworths Holdings Limited (JO: WHLJ ): The retail company, in its 1H23 trading update, stated that the group’s turnover and concession sales from continuing operations (i.e. excluding David Jones, which was disposed of in the prior year) increased by 5.4% and by 4.4% in constant currency terms as compared with the previous year. Meanwhile, group turnover and concession sales (including the six-month contribution of David Jones in the prior period, which is therefore non-comparable) decreased by 23.6% as compared to the prior period on a total basis. Moreover, the company expects EPS to be between 25.0% to 35.0%, lower as compared with 293.70c recorded in the previous year. Also, HEPS is expected to be between 25.0% to 35.0%, lower as compared with 294.50c recorded in the previous year. The group’s results for the interim period are expected to be released on or about 28 February 2024.
  • Clicks Group Limited (JO: CLSJ ): The retail company, in its trading update for 20 weeks ended 14 January 2024, revealed that retail sales advanced 11.8% as compared with the previous year. The company reported robust growth over the period in personal care, beauty and everyday essentials such as confectionery and cleaning products, supported by strong sales of private label and exclusive brands. Further, the company intends to release its interim results on or about 25 April 2024.
  • AVI Limited (JO: AVIJ ): The consumer goods company, in its 1H23 trading update, revealed that group revenue increased 7.1% to R8.38bn. Consolidated HEPS for the six months ended 31 December 2023 are expected to increase by between 16.0% and 18.0%, from 318.90c reported in the prior year. EPS is expected to be 16.0% to 18.0% higher as compared with 318.40c reported in the previous year. The company intends to release its full results for the six months ended 31 December 2023 on or about 4 March 2024.
  • Cashbuild Limited (JO: CSBJ ): The retail company, in its 2Q24 operational update, indicated that revenue increased 5.0% as compared with the previous year. For the 312 existing stores, revenue increased by 3.0% and the 9 new stores, contributed 2.0% growth. Moreover, the Group opened one new store, completed two refurbishments bringing the total number of stores trading at the end of the half year to 321.
  • Karooooo (JO: KROJ ) expects improved profit after ending direct vehicle sales: Karooooo expects its profit to rise in the next quarter after the group decided to stop buying second-hand vehicles in SA for its Carzuka online platform after consulting with dealerships who said the website was competing with its business.
  • MultiChoice (JO: MCGJ ) partners with MTN (JO: MTNJ ) for new Showmax data bundles: MultiChoice has partnered with MTN for new data packages around the revamped Showmax platform as part of an effort to reduce data costs and entice more customers to the streaming service.

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